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Commentary

To Compete With Tech Giants, Publishers Need To Think Like Software Companies

Publishers grappling with flat or declining ad revenue — print and digital — are developing new lines of business and facing bigger decisions about whether merging with rivals makes sense.

I recently spoke with Andres Moran, vice president, publisher sales at behavioral marketing firm BounceX, about the industry and its challenges. He has worked with publishers of all sizes and
helped them develop monetization strategies.

Publishers face daunting competition from tech giants like Google, Facebook and Amazon, whose in-depth data about consumers are driving growth.
Amazon’s fledgling ad business surged 95% to $3.4 billion in
the fourth quarter from a year earlier, outpacing the 30% increase for Facebook and 20% gain for Google, the more “senior” rivals in the digital ad market.

“A publisher needs
to think more like a software company,” Moran said.

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Part of that strategy means generating revenue from paid subscriptions, which isn’t as simple as slapping up a paywall and
expecting viewers will subscribe to a website or mobile app. It also requires a strategy of creating higher-value content that isn’t easily found on every other website.

“Publishers need to dramatically change their business from having very little friction or sharing snackable content that’s easily shared on social channels,” Moran said.
“The key metrics of that business are pageviews and visits.”

Unfortunately, the dynamics of the marketplace will mean that a handful of special-interest publications with unique
content will be able to command higher subscription fees. Bigger publishers with high volumes of traffic will be better positioned to sell ad space to national brands seeking mass audiences.

“Major publishers that have anywhere from $100 million to $300 million in digital ad revenue need a lot of subscribers to supplant that,” Moran said.

He also said publishers can
learn from the ad-placement strategies of social-media companies like Facebook, which doesn’t hit viewers with an ad as soon as they open its mobile app or website. Instead, the social network
lures in viewers with the posts they want to see in the news feed or “stories,” which string together several images or videos in a post that disappears after 24 hours.

Publishers
can use the same strategy to engage viewers before showing ad insertions, Moran said.

Ecommerce is another line of business that publishers are developing, as exemplified by the
Wirecutter website that The New York Times acquired in 2016. To be effective, ecommerce needs to focus on higher-value products, not low-cost impulse buys that have no
margins.

“You want to avoid offers like, ‘Here are 10 great leggings for $15,’” Moran said. “That’s a low-intent, low-consideration purchase that
doesn’t help to build a longer-term relationship.”

Speaking of building relationships with readers, publishers also need to develop a strategy to capture email addresses or push
notification opt-ins, followed by a tactful plan to send emails and push notifications that don’t overwhelm or offend subscribers, Moran said.

Readers who feel tech companies have
misused their personal data and invaded their privacy will appreciate publishers that show them more respect.